Tag Archives: jobs

Another Federal Judge Gets It Right

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Disparate theory is the idea that racial discrimination occurs, even when there is no intent to discriminate. This “theory” eliminates the “discrimination” part of the behavior actually prohibited by the Fair Housing Act of 1968, and it is the justification for a HUD rule written to allow a legal finding of discrimination if there is merely a statistical showing of disparity. This “theory” also disregards the fact that there are many factors in play with such disparity besides actual discrimination, things like financial qualifications, criminal history, and so on.

US District Judge Richard Leon has thrown the BS Flag on the concept in American Insurance Assoc v HUD. He also castigated the government for attempting to apply such a standard, and he decried Labor Secretary Tom Perez’ behavior related to the case. AIA is a case in which the insurer sued the government over that HUD rule, arguing that it was illegal as no such authority exists in the FHA to permit it.

A major part of Leon’s ruling centered on the distinction between “disparate treatment” and “disparate impact.” The former represents actual discrimination—the denial of this or mandate of that based solely on the color of a man’s skin, for instance. The latter is only an outcome—the result of a broad-based and broadly applied criterion, like financial qualifications—and an absence of discriminatory intent other than, e.g., those financial qualifications.

After leading the Federal government, as defendants in AIA, through a grade school use of the dictionary in defining the words the government used in its own briefs to justify the HUD rule, Leon pointed out that, not only did the text of the FHA not say what the government claimed it said—that disparate impact, in addition to treatment, was explicitly barred by the Act—Leon pointed out that the Act contains no language barring disparate impact and further that Congress knew how to do so, and so would have done so, had that been part of the Act’s goal [citations omitted]:

Put simply, Congress knows full well how to provide for disparate-impact liability, and has made its intent to do so known in the past by including clear effects-based language when it so chooses. The fact that this type of effects-based language appears nowhere in the text of the FHA is, to say the least, an insurmountable obstacle to the defendants’ position regarding the plain meaning of the Fair Housing Act.

Leon also was unimpressed with the Federal government’s behavior in attempting to keep disparate impact questions out of the courts altogether. In a footnote in his ruling, Leon said

…both Mount Holly and Magner were settled before the Court could decide the issue. The circumstances behind the Magner settlement, however, are particularly troubling. Indeed, a Congressional Joint Staff Report found that—in negotiating a quid pro quo deal that facilitated Magner’s settlement—then-Assistant Attorney General Thomas Perez “exert[ed] arbitrary authority” to settle the case and “placed ideology over objectivity and politics over the rule of law …. Rather than allowing the Supreme Court to freely and impartially adjudicate an appeal that the Court had affirmatively chosen to hear, [Perez] openly worked to get the appeal off of the Court’s docket.”

In his concluding remarks, Leon also wrote,

This is, yet another example of an Administrative Agency trying desperately to write into law that which Congress never intended to sanction. While doing so might have been more understandable—and less troubling—prior to the Supreme Court’s decision in Smith, in its aftermath it is nothing less than an artful misinterpretation of Congress’s intent….

This is a blow for freedom and for sound business sense in making decisions.

The opinion can be seen here.

Outcomes

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Tuesday’s mid-term elections have the potential to be a sea change in the governance of our country and in the direction we take as a nation. The elections have resulted in a sharp change of control of the Senate to the Republicans, giving them both houses of Congress for the last two years of President Barack Obama’s term; an expansion of House control by 13 seats; a net gain of three (so far) governorships; and an increase in Republican control, depending on how too-close-to-call local races come out, to between 67 and 69 out of 99 of State legislatures. The governorships are especially telling given some particular victories: Scott Walker in Wisconsin, John Kasich in Ohio, Rick Scott in Florida, Bruce Rauner in Illinois, and Larry Hogan in Maryland, among others.

Together, these outcomes represent a stark and clear repudiation by Americans all across our country, in Red States and Blue, of the policies of President Barack Obama and his fellow Democrats. This is demonstrated not only by the broad swath of States involved in the Senate and Gubernatorial elections, but especially by the fact that every Representative in the House was up for election—Americans in every district of America had something to say on the matter—and by those state legislature results: Americans in every local district had something to say on the matter.   It’s also demonstrated by the fact that Obama put his policies on the ballot—every single one of them—and the voters said, “No.”

Now Republicans need to do things.

In short order, they need to organize and publish a coherent legislative agenda, as House Majority Leader Kevin McCarthy (R, CA) said on the night of those elections that he wanted them to do. Then, just as quickly, they need to pass legislation with specific, simple, coherent requirements. A good set of bills with which to start would include tax reform, jobs (re-execute, for instance, the 40+ jobs bills the House passed and sent to the Senate, where Majority Leader Harry Reid (D, NV) personally killed them); immigration reform; repeal of Obamacare; a series of bills to restore health insurance and to improve the operation of health insurance and health care systems; approval of the Keystone XL pipeline; and elimination of “green” subsidies (and subsidies for oil and gas companies).

It’s entirely likely that Obama will veto most, if not all, of those bills.

However, if the Republicans in Congress put forward a coherent plan and then act with specifics in the first days and weeks of the new Congressional Session, three things will occur: Republicans will demonstrate that they can govern better, with more coherence, and less intrusion into Americans’ lives than the Democrats have done; our economy finally will take off; and whatever Obama does—sign or veto—will enable the Republicans to shape the 2016 elections on terms favorable to them.

In the meantime, Congressional Republicans need to be alert to, and able to stop, Obama and Reid shenanigans during the Democrats’ lame duck next couple of months. The Senate Democrats, don’t forget, have judgeship confirmations to approve, and they have an Attorney General to confirm, and they have cover for Obama’s immigration travesties to provide, and they have….

Economic Improvement?

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Our GDP grew at 3.5% last quarter compared to the prior year’s 3rd quarter, against economists’ expectations of a 3.0% growth rate. That’s good, right?

Why did it grow?

Part of the growth came from trade: imports fell sharply. Net trade is a definitional component of our GDP, and net trade consists of Exports less Imports. A reduction in imports, then, by definition elevates GDP.

This particular reduction, though, reflects a reduction in buying goods and services from overseas, which is entirely consistent with another trend: Americans aren’t buying stuff at any high rate, still.

In the 22 quarters since early 2008, real personal-consumption expenditure, which accounts for about 70% of US GDP, has grown at an average annual rate of just 1.1%, easily the weakest period of consumer demand in the post-World War II era.

[Note that the larger subject of the cite’s linked-to Elizabeth MacDonald article concerns our economy’s bailout impeded recovery.]

A larger part of the fall-off in imports, though, is the drop in oil imports. This also reflects a couple of factors: oil imports (imports generally) are measured in dollar prices, and the price of oil is down quite a bit from increased supply. The reason oil imports are down is due partly because we’re bringing smaller volumes of the stuff, but also because we’re spending less on what we do bring in. These two factors—reduced buying generally and the reduced price of oil—greatly reduce the impact of reduced imports generally on our economy. Imports are down because personal consumption is down and because it costs less to buy what we do import. These aren’t reflective of a sound economy.

The other side of that increased supply, though, is increased domestic production of oil (and of natural gas). Lower prices that result from that, both globally and domestically, are good for our economy, but the impact on the global price of oil—those import costs—really has little to do with hard goods being imported, or not.

There’s another factor in that apparently sound quarterly GDP growth rate: government spending in the form of defense spending. Government spending is another definitional component of our GDP, so whenever government spending increases, so does our GDP, regardless of any impact on our actual economy—the private sector, where Americans live and operate. I won’t go into how government spending crowds out private spending; that’s well covered in earlier articles of mine and in articles written by far sharper individuals than me.

It’s the particular government spending, defense spending, that’s of interest in this latest GDP growth number. Defense spending grew at its fastest rate in five years. There are sound reasons for that growth, but defense spending is highly volatile, as heavily influenced as it is by, not just big ticket items, but by huge ticket items, also. These huge ticket items include Navy and Air Force spending for (enormously expensive) ships and aircraft. Next quarter’s spending, next year’s spending, could easily be wildly different from the just concluded quarter’s.

Other factors in last quarter’s GDP growth rate are less encouraging—and they reflect conditions in our actual economy.

Growth in business investment—R&D, capital improvement, plant construction, and so on—slowed and fell well short of expectations. Business investment is a reflection of business owners’ expectation of future economic conditions; they’re unwilling to spend money today if the demand for their goods won’t be there tomorrow. Lack of such investment also means an anticipation of business income being unavailable for pay raises for existing jobs or for hiring for new jobs.

Also, consumer spending decelerated to a 1.8% rate. That’s us not spending (and not buying foreign goods).

That GDP number turns out not to be all it’s been cracked up to be.

European Taxes

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…and, by extension, the goal of this administration’s Europe-wannabe tax schema.

Matthew Karnitschnig and Robin van Daalen, in The Wall Street Journal, interviewed the newly retired Marius Kohl, who was for 22 years the Attendant—head—of Luxembourg’s Sociétés 6, or Companies 6, the Luxembourg government agency that, among other things, determines the annual tax owed by each of roughly 50,000 Luxembourg-registered holding companies.

It’s a wide-ranging interview and well worth the read, but I want to focus on one small bit of it.

One outcome of Kohl’s stewardship is that Luxembourg became a corporate tax haven: companies registered there generally paid little in the way of taxes. This especially stands out against the EU average headline corporate rate above 21%, rates running as high as France’s 33%, and Luxembourg’s own 29%.

Naturally, the EU is dismayed with this, and with Kohl’s departure, it’s pushing Luxembourg to “fix that.” Luxembourg is being unfair, say the EU’s functionaries, and it should raise its corporate tax to be more in line with the rest of the EU.

Notice that. The EU declines to compete with Luxembourg (or with Ireland, whose official rate of 12.5% is being raised with the Irish government surrender to EU pressure) for business and associated employment. Instead, Luxembourg must make itself less competitive, must lower itself to the EU’s plain.

Because, it really isn’t people’s money, its government money that government kindly lets people use some of. Because, people are just piggy banks for the men of government, we’re not really in this for our own benefit.

This is where the US is headed, for all that President Barack Obama is talking about lowering our own corporate rate from 35% to 28%.   Obama, after all, is holding out for more taxes raised elsewhere in return.

Jobs Numbers

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The headline numbers are in, and they seem favorable enough: unemployment has dropped to 5.9%, and 248,000 new jobs were created in September.

However.

Counting the 142,000 new jobs created in August, new jobs were created at a monthly average of 195,000 jobs per month over the total interval. Using, instead, Labor’s revised August number of 180,000 new jobs (I’d be curious to learn how President Barack Obama’s Labor Department could make such a large estimation error—a 20% error), that still works out to a pretty anemic 214,000 new jobs per month over the period.

The labor force participation rate, at 62.7%, remains at historic lows. If this rate were at 2007’s level of 66.2% (a rough average for the year), the unemployment would be nearly 11%.

Even taking the 5.9% unemployment rate as legitimate, we’re still years behind schedule—not just behind the rate extant at this point in a normal recovery, but behind Obama’s promised unemployment rate which he used to sell his Stimulus package, as this graph illustrates.ObamaPromisedEmploymentRate

In particular, we’re still not at the 5% Obama promised we’d reach by last year. Oh, and that peak unemployment of 8% worked out to over 10%, which was worse than the No-Stimulus situation which he projected.

Additionally, median income remains down sharply from pre-Panic levels—7.9% sharply.

Additionally, new jobs created since the Panic officially ended in 2009 has only just, this past summer, matched the number of jobs extant in 2007, some three or more years later than prior recoveries. And that…milestone…ignores the fact that there are, today, 16 million more Americans in the civilian noninstitutional population (able-bodied Americans, capable of working) than there were just prior to the Panic.

What’s different between this recovery and the recoveries from prior recessions? Only Obama’s policies, actively aided and abetted by his pet, Senate Majority Leader Harry Reid (D, NV) and the latter’s Senate cohorts. All the prior recoveries proceeded much faster, and those paces occurred under both Republican and Democrat administrations.